Los Angeles could be broke by June 30 following the Department of Water and Power's decision to withhold its final annual transfer of $73.5 million to the city's general fund, the city controller warned Monday.

Calling it the city's "most urgent fiscal crisis" in recent memory, Controller Wendy Greuel asked for swift action from Mayor Antonio Villaraigosa and the City Council.

"It is imperative that you act now," Greuel said in a letter. "That is why I am asking you to immediately transfer $90 million from the city's reserve fund so I can continue to pay the city's bills and to ensure the fiscal solvency of the city."

The general fund, which covers city payroll and contracts, would be empty by May 5 without the transfer, Greuel said. But using cash reserves to pay salaries and contracts would deplete the emergency reserve fund by June 30, she said.

Interim DWP General Manager David Freeman DWP said the independent utility had to take the rare action of withholding the transfer payment - which is made in lieu of property tax payments to the city - because the city council did not approve a recent rate hike request.

Without the increase in the Energy Cost Adjustment Factor, Freeman said the DWP will not have enough of a surplus to meet all of this year's promised $220 million transfer to the general fund.

While it appears there is little the city can do to force the independently run DWP to make the payment, Councilman Bernard Parks has a motion before the City Council today to do just that.

"This is retribution for the council's refusal to approve that increase," said Parks, who chairs the council's Budget and Finance Committee. "Last year, when we asked them to tell us what their surplus would be, they said $220 million and we budgeted for that.

"They never said it was contingent on this rate hike. They told us what they could give us. It is disingenuous now to change their story."

The City Council last week refused to approve a 6 percent increase - or .8 cent - on the Energy Cost Adjustment Factor. Councilmembers suggested the ECAF be raised by .6 cent, while they had time to assess the impact of the increase.

The DWP board countered with a request to raise it .7 cent - a move rejected by the council by a 13-0 vote. Meanwhile, the deadline for imposing the increase expired. The next time the DWP can seek an increase is for bills in July.

The ECAF is used to absorb the rising costs of supplying energy, but it has been frozen for the past several years. The DWP this year asked for increases totaling 28 percent over the next year to cover cost overruns of about $6 million a week.

Because the City Council vetoed the rate hike, Freeman said the utility will not have enough cash to pay the city and also fund its programs.

Freeman said the DWP has $1.2 billion in its debt reserve fund, but needs to hold on to that money to finance its $5 billion in bonds expected to be issued for its future infrastructure building program.

"In this financially challenging environment, we cannot recommend any additional transfers during the current fiscal year," Freeman said.

Councilman Greig Smith, who also serves on the budget panel, said the DWP was leaving the city in an awkward position.

"There is not much we can do at this point in the process," Smith said. "We cannot lay off workers quickly enough to make up that kind of loss."

Greuel said the DWP move will further complicate things for already cash-strapped city.

"The question I have been asked most often during the budget crisis is: "When will the city run out of money?'," Greuel said. "Unfortunately, we finally have the answer. Without the full transfer, I now project... the city's general fund will be out of money - in fact it will be negative $10 million - on May 5."

Without a transfer from the city's reserve fund, Greuel said the city will have to shut down because city workers could not be paid.

She added that reserve funds, usually about five percent of the city budget, would likely be used up by June 30.

The city has begun the process of laying off 1,000 workers by June 30 and plans 3,000 more layoffs next year.

Freeman said this was not the first time the DWP was unable to make its promised transfer. In 1992-93 and again in 1995 and 1998, the utility was unable to make payments.

California is just the start most states are in bad shape the liberal mind set of giving to all can't be sustained now the bill is due. Its the government that has failed us.
Remember in November VOTE THE INCUMBENTS OUT!!!!!

California is just the start most states are in bad shape the liberal mind set of giving to all can't be sustained now the bill is due. Its the government that has failed us.
Remember in November VOTE THE INCUMBENTS OUT!!!!!

And the ignorant rhetoric begins. Someone has been watching a little too much Glenn Beck.

California is just the start most states are in bad shape the liberal mind set of giving to all can't be sustained now the bill is due. Its the government that has failed us.
Remember in November VOTE THE INCUMBENTS OUT!!!!!

This is great...First I get to bailout the bankers and now I will probably get to bailout portions or all of the great state of California... I didnt have a hand in voting for the government of California. How many times have I disagreed with most of its decision and called them unsustainable? Yet Im betting my tax dollars will float them because they are too important to fail... Oh well caring only gets you so far._________________You know you own someone when you can agitate them enough to quote you in their signature.

I love it when utility companies hold towns by the balls and wonder why more towns do not open this stuff up for competitive pricing?

Why doesn't the town put out a bid request for a new utility company to come in and provide power for a better price?

Why doesn't the town offer the home owner a choice of power companies to use better yet why is their no competition built into this system?

I know I don't understand the process enough to say anything for certain but it seems to me that they can charge what ever they want cuz the state and towns refuse to allow competition into the system allowing a monopoly to dictate everything._________________PEACE

How many sets of power lines do you want running through your neighborhood?

It will still be 1 power company delivering the power. There will just be different billing companies. Houston has lots of billing companies to chose from. If anyone pays more than the cheapest rate, they are getting ripped off. All the new "power" companies are nothing more than new billing companies. They are middle men.

Center Point Energy delivers all power to Houston and surrounding areas. Reliant, Gexa, TXU, etc. will bill you. You will still have only 1 set of power lines._________________Work SUX!

I would agree that it is both the fault of the representatives and those that voted for them. Hopefully the CA folks see where they went wrong and work to change it. It's a shame that the rest of the country will have to bail them out. It's also a shame that we've become a society that expects something for nothing. Like jt09 pointed out, we want all these "government services" but we don't want to pay for them..."don't raise my taxes". That type of mentality and government model isn't sustainable. You can only tax so much and the well runs dry. Good conservative approaches don't let that happen. Small government, responsible spending, and moderate taxation have always worked better than big government and uncontrolled spending, along with constant tax increases.

One thing to note is that CA is a good example of a more liberal spending and taxation approach and a more socialized style of government. Tax and spend and grow government without restraint is what tends to happen with a style like that and what we're seeing is the result of it with the microchosm of the country's economy and government that CA is.

I'm so glad I left the state for various reasons. The only thing I don't like is still having to pay for their mistakes._________________If love is blind, why is lingerie so popular?

It's the same issue with Cable TV companies.. they by default have a monopoly and we can't do nothing about it.

Why does my town not give me the option of picking a cable provider that provides me with the best channel package and price for me?
How I understand it to work is the town sings into some line leasing contract with one company and we are stuck with them as the only option like it or not no matter what the price is or the service level they provide. They actually talk like that on the phone - Comcast = the package is what is it do you want it? no I want another company's package and price!@!

NO COMPETITION and I have no ability to do anything about it except not have cable TV.

Why?
How are they able to get away with this?

Surely someone knows more about how that works than me and can explain why we are not offered the choice.

In every single industry I know of with choice comes competitive pricing - more options and better service sounds like a win win for the consumer so why are we not following the business model that works?_________________PEACE

In every single industry I know of with choice comes competitive pricing - more options and better service sounds like a win win for the consumer so why are we not following the business model that works?

Here is an ironic fact. The state with the highest paid state legislators is California. The second highest is Michigan. Funny that two of the states that are hurting the most in the country have the highest paid people running them.

In every single industry I know of with choice comes competitive pricing - more options and better service sounds like a win win for the consumer so why are we not following the business model that works?

Health Care???

I hope you are citing that as another example, because in a discussion on how government meddling in the free market screws over the consumer, health care is a great example.

Why does my town not give me the option of picking a cable provider that provides me with the best channel package and price for me?

honest answer is that you live in nowheresville when it comes to cable. we have competing cable companies here in austin and most every major city does as well, afaik. i doubt that competitive cable companies are eyeing nh and it's minuscule population and racing to break into that market.

The problem is that the government and all it's tentacles continues to grow unchecked. It's nonpartisan, democrats will spend in one place, republicans will channel those funds somewhere else. Good example is the HS I attended. Since I have left the school has added an extensive security camera systems. They have also hired a full time police officer to monitor the halls and what not. Furthermore, they routinely bring in the K9 unit. All of this is done in the name of safety. The school is a suburban school that has zero history of violence. The spending is simply to curb drug use. The cost has to be in the range of 120K+ per year just to lease the police officer from the local station. The kicker is that the local police station is located directly across from the school. It's small inefficiencies like this that add up. If anything was ever to go down an officer could probably respond within minutes. If something happened in the school parking lot they may actually have a faster response time than a officer on foot within the building.

Another good example is the state I live in. Wisconsin has 72 different counties, with roughly 25% living in just three counties. In contrast California only has 58 counties with 600% the population. Each Wisconsin county has it's own functioning county government and provides it's own services. The tax savings that could be had if some of the counties were merged could be astronomical.

I don't think it's the programs that are draining the coffers it's the incredible waste and inefficiency of the government. The drug war, continued expansion of the interstate system, etc._________________jt09 wrote:
I used to get all happy when the girlie would make a colonic appointment. That meant she was going to be breaking out the "fine china" soon.

Interesting the summations made here without knowing the actual politics involve behind this debacle. Not to mention the fact this is LA internal politics not played out or dictated by the State or at the State level._________________If I agreed with you we would both be wrong.

I'm glad I don't know about the politics - I don't want to know about the politics, I don't think anyone does. Things need to get done and done within budget. Government can't seem to do that, and if these people were my employees, they'd all get fired. I'm going to give L.A. a big high five.

Interesting the summations made here without knowing the actual politics involve behind this debacle. Not to mention the fact this is LA internal politics not played out or dictated by the State or at the State level.

The whole state is in trouble....Most of us know you guys face pension issues, labor issues, immigration issues etc. These are all very generic problems. Its an issue of money in vs money out. The state of California saw this coming for miles and as far as I can tell did very little to cut spending...This is the perfect storm for California. You have fiscal responsibilities, social programs you wont cut and no money coming in. You guys have dug a grave that you arent willing to climb out of.

We know why you guys have so much money going out but lets talk about why you dont have any money coming in...If you study tax structures you know the great state of California has a very liberal and progressive tax system. The top 1% in income pay nearly 55% of all taxes in your state. When the rich take a hit you have no one else to loot. You know how many people live in my neighborhood that fled California like it was on fire because of the tax structure? Lets just say its a lot.....Hmmm that creates a problem. Surely the great state of California has corporate taxes coming in right? Oh wait you guys ran DROVES of them off because you wanted to regulate everything. If I am opening a business would I do it in California.... ABSOLUTELY NOT! No way, no how! Well there goes your corp tax dollars. In closing to add to your woes the downturn in the economy and the collapse of the housing market put you on your knees.

There you have it. You have too much going out for social programs, pensions, illegal immigration and you shot yourself in the foot with your revenue streams....What makes me laugh deep down inside is this is the exact same JUNK that Obama is preaching is good for the WHOLE country...Spend more than you can afford, make it so painful to do business in America that you leave or off shore, Tax individuals that produce...Your state is the model for what this country is headed for. The common citizen is just too STUPID to see it. Everything DOES start on the west coast and your brand of crazy is being forced on all of us._________________You know you own someone when you can agitate them enough to quote you in their signature.

Of course I'm wrong, I mean my mention of the fact that this has NOTHING to do with the California state budget is patently false. Essentially my job keeps me in a position of unknowing and how could I possibly determine that this is a local issue based on decades of conflict between LADWP and the LA City Council that has little to do with budget and more to do with politics and internal power struggles. You know you guys are right...

Get f'd if you think for a minute CA is going under. The articles are sensational but this budget year is looking up thankful to very conservative estimates in the last budget. Not to mention last year has given a platform to needed reforms. This State experiments a lot and doesn't always succeed but never count CA out.

And as to the comments about CA receiving Federal funds, it's about damn time we took our fair share. We've been the donor State to the Union for decades and should receive funding for amount we bring to the pot. As the State with the largest GDP (if we were independent) it is our right to keep some of these dollars to deal with our issues.

As for pensions, California's public employee pension system is well run and will recover it's funding. The recent reports to the contrary have been refuted and shown evidence to the contradict excess liabilities. Of all of State government CalPERS is probably the best run agency.

I'm not saying this State is perfect or well off. Just saying your comments are ill informed and not based in the reality on the ground. That and this post is about LA not CA and one should take that into account before saying the State is going under and taking the union with it.

And before you lecture me on local municipalities and their issues shouldn't you focus on your water and budget issues in Georgia? You're not free of this economy, despite your leadership._________________If I agreed with you we would both be wrong.

CA is NOT receiving nor did the State receive "bailout" dollars. Get that notion out of your head because it is patently false. Your tax dollars are safe and you can sleep well because trust me our economy even in disrepair trumps yours._________________If I agreed with you we would both be wrong.

CA is NOT receiving nor did the State receive "bailout" dollars. Get that notion out of your head because it is patently false. Your tax dollars are safe and you can sleep well because trust me our economy even in disrepair trumps yours.

Do you know for a fact that you recieved no money from the FED? How would you know? I realize CA didn't receive any official bailout dollars from congress, but that is not the only revenue stream. I am not argueing, just curious if you know one way or another, because typically no ones knows where the FED throws money.

Of course I'm wrong, I mean my mention of the fact that this has NOTHING to do with the California state budget is patently false. Essentially my job keeps me in a position of unknowing and how could I possibly determine that this is a local issue based on decades of conflict between LADWP and the LA City Council that has little to do with budget and more to do with politics and internal power struggles. You know you guys are right...

Get f'd if you think for a minute CA is going under. The articles are sensational but this budget year is looking up thankful to very conservative estimates in the last budget. Not to mention last year has given a platform to needed reforms. This State experiments a lot and doesn't always succeed but never count CA out.

And as to the comments about CA receiving Federal funds, it's about damn time we took our fair share. We've been the donor State to the Union for decades and should receive funding for amount we bring to the pot. As the State with the largest GDP (if we were independent) it is our right to keep some of these dollars to deal with our issues.

As for pensions, California's public employee pension system is well run and will recover it's funding. The recent reports to the contrary have been refuted and shown evidence to the contradict excess liabilities. Of all of State government CalPERS is probably the best run agency.

I'm not saying this State is perfect or well off. Just saying your comments are ill informed and not based in the reality on the ground. That and this post is about LA not CA and one should take that into account before saying the State is going under and taking the union with it.

And before you lecture me on local municipalities and their issues shouldn't you focus on your water and budget issues in Georgia? You're not free of this economy, despite your leadership.

Im not lecturing you at all...I am just pointing out the facts that are reported through DOZENS of avenues including those through the liberal media outlets. If you took it personally that wasnt my intent.

Georgia has PLENTY of problems including its own budget problems and immigration issues. I cant find one single slice of evidence that the state of Georgia is anywhere near asking for a bailout, however...

What you may be missing is that I could care less about California with the exception of your oh so tasty In and Out burger goodness. You guys can be as liberal as you want as long as it doesnt affect my pocket book. If the multiple sources of information I have read are correct, 25% of your budget is not funded and will have to come by additional cuts or will come in the form of a federal bailout, however....Now dont you think I should have something to say about that?_________________You know you own someone when you can agitate them enough to quote you in their signature.

Do you know for a fact that you recieved no money from the FED? How would you know? I realize CA didn't receive any official bailout dollars from congress, but that is not the only revenue stream. I am not argueing, just curious if you know one way or another, because typically no ones knows where the FED throws money.

Anyone can find out exactly where the fed is throwing money... it's your money...

We're a couple billion apart but CA still has the edge by about $6 billion. At least we did last year, until the end of this month there is no way to do a direct comparison for this budget year.

Tbonez wrote:

If the multiple sources of information I have read are correct, 25% of your budget is not funded and will have to come by additional cuts or will come in the form of a federal bailout, however....Now dont you think I should have something to say about that?

Your facts are incorrect or your statement lacks understanding of the reality of the situation, most likely the national sources that wrote those articles lacked knowledge. The sources regarding a bailout, such as that received by the banking industry or auto manufacturers was mentioned in the press a year ago and never the reality. CA always has big budget fights which allows partisan politicians to fire off rhetoric to mobilize their base. This rhetoric makes for great national news. But the reality on the ground is far more sensible than is reported.

The upcoming budget is looking rather reasonable but there will still be rhetoric. Texas and Georgia are facing similar structural deficits in their state budgets so before you start spouting off about liberal this or that read your states budget proposal.

On a side note: I represent the political interests of some of CA's largest corporations so don't think for a moment I'm unaware of the issues this state has... That being said there are amazing benefits to this state that people weigh regularly and keeps them here.

Nooga678 wrote:

Nor*Cal wrote:

BTW!!!

CA is NOT receiving nor did the State receive "bailout" dollars. Get that notion out of your head because it is patently false. Your tax dollars are safe and you can sleep well because trust me our economy even in disrepair trumps yours.

Do you know for a fact that you recieved no money from the FED? How would you know? I realize CA didn't receive any official bailout dollars from congress, but that is not the only revenue stream. I am not argueing, just curious if you know one way or another, because typically no ones knows where the FED throws money.

Every State receives Federal dollars every year which are basically redistributed income tax through various grants. California traditionally gets about $0.70-$0.78 of every dollar paid to the Feds. Which is/was my point.

ARRA funding has changed this slightly but per capita, CA is dead middle in terms of ARRA fund distribution by the Feds._________________If I agreed with you we would both be wrong.

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